FAISALABAD:
Domestic cotton prices are likely to rise as India has banned cotton exports, which will attract international buyers to Pakistan as the country has a good harvest this year, say market experts.
This has provided a ray of hope to the farmers who were earlier hurt by a sharp fall in cotton prices from previous year’s levels. However, while the farmers are upbeat, textile millers have started voicing concern.
Traders and exporters expect cotton prices to go up in coming days mainly because of an increase in demand in the international market following the export ban by India, the world’s second-largest producer.
In the domestic market, cotton was being sold at Rs5,350 per 40 kg, which was around 60 per cent lower than last year’s peak of Rs14,000.
According to traders, in this season prices are one-third of what were last year, but demand is still weak due to energy shortage and expectations of a further fall in prices.
A bumper harvest has also played its part in keeping prices low. So far, 14.38 million bales have reached the market, which are 25 per cent higher compared to 11.50 million bales at the same time last year.
“Industry has the capacity to consume the entire crop provided the government ensures uninterrupted gas supply to the textile chain from spinning to processing mills,” said Imran Maqbool, Chief Executive Officer of Crescent Fabrics. He also sought protection for the industry by banning cotton exports, like India.
“Spinners were not heavily buying on hopes of a further decline in cotton prices. However, the sudden decision of India has taken them by surprise,” Maqbool said, adding the industry had so far been consuming last year’s stocks.
Traders said cotton exports would bring additional foreign exchange and farmers would also benefit from an increase in prices in the international market.
“China – the main buyer of the fibre in the region – will switch to Pakistan market after the India ban,” said Ashraf Gandhi, a yarn trader.
Spinners said the export of cotton was not a viable solution to the problem of low prices in the domestic market. The best way would be to provide gas to the entire textile industry seven days a week to encourage it to start purchasing the crop, they suggested.
“Once spinners began the process, prices will automatically rise. This will serve the interests of both farmers and spinners,” a spinner said.
Published in The Express Tribune, March 7th, 2012.
COMMENTS (8)
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@Cynical:
maybe u did not read the heading of the article...
and btw...how do u claim WE export??...are u a cotton producer??...are u doing a favour by exporting??...
grow up
@Cynical
You are moving in a different direction in terms of the comparison. "Hady" never compared Pakistan with India in terms of moral/cultural values. He compared in terms of business values & trading. India has banned because their local demands are increasing drastically, the consumers their are building up the image of branding and stuff. India's land size is fixed and hence the production of cotton would also remain constant but as their local demands are increasing they have started serving their locals. If they can get the required margins in local market then there is no need to get in to export hassle. Pakistan itself is a poor nation then how they can be of help to any other nation( Sad but true) ?
@Hady @khan
Don't compare us with Indians, please. We are two different nations,our religion,our culture,our tradition,our custom,our language,our dress,our food,our value system and ethics even, our mind set is different from that of the hindu baniyas who can only think of money and profit.You and me have more important things to mind for e.g. after life. India bans export of cotton to maximise their profit at the cost of the rest of the world. We export the same cotton so the poor workers in foreighn countries can have food on their table.Now compare who is more humane.And who will be awarded jannat on the judgement day.
stop exporting cotton and invest more in cotton product,and export more product,so we can creat more jobs in the market.
india did the right move, save domestic cotton, lower domestic prices, make value addition and then sell finished products all over world at high price. Like fools, we are being happy of exporting cotton to china, which will raise local prices here, local mills will shut, and china will resell the finished shirt back to us at triple price... there seem to be no economists left in this country...
In this country the quickest way to make a buck is always the "right" way and in this country's so-called "national interest" or whatever they call it..doesn't matter if its akin to selling your face to save your nose. No need to move up the value chain, work harder, increase skills, earn more...lets always pick the most short-sighted, populist, and self-defeating route to success....perfect example: export cotton without even processing it or adding any value...
Why dont we learn lessons from India, By exporting cotton, we re giving away our gold for nothing. Why our does not think about country instead for individuals?? Govt should supply gas to textile sector 7 days a week for value addition, because its in the interest of Country ( More monetary benefits because of value addition) Farmer (more cotton price due to increased demand) Spinner ( Increased production and more profit ) Pakistan Should also ban export of cotton and facilitate spinning sector to add value to cotton rather than exporting it in raw form.